Cochlear hit after profit downgrade

High-tech hearing implant manufacturer Cochlear had its share price savaged on Monday, losing nearly 20 per cent of its value, after it revealed disappointing full-year sales figures.

The downgrade by Cochlear is the latest blow for Australia's listed healthcare sector after drug maker Pharmaxis was shunned by investors after its cystic fibrosis treatment failed to clear critical regulatory hurdles to enter the US market.

Cochlear warned its net profit for the year to end-June would be in the range of $130 million to $135 million.

The market had been expecting a range of between $146 million to $164 million.

The news wiped about $665 million from Cochlear's market capitalisation as the shares closed down $11.66 or 18.1 per cent.

The stock's close of $52.88 was Cochlear's lowest finish since November 2011.

Cochlear chief executive Chris Roberts attempted to shore up confidence in the company's position, telling analysts the company's final year dividend would be "at least" $1.25 per share. He also blamed slower market growth in its biggest market, the US, which generated more than 42 per cent of the company's revenue in 2012.

But analysts said reasons for the downgrade were not entirely explained during the briefing.

"I don't think those two points fully reconcile with the whole. There's a hole there that seems larger than those two elements would otherwise explain," Wilson HTM's Shane Storey said.

The profit downgrade comes as the company begins its launch of the new hearing-aid software, Nucleus 6, which has been approved in Korea and Canada, but is still awaiting regulatory approval in the US and Europe.

The Nucleus 6 is an upgraded processor, not an actual implant (there are two parts to an implant system: the device that is surgically implanted, and the processor, which is the software device that sits behind the ear).

Mr Storey said Cochlear was struggling with a tired product range. "I think that's probably the secret to why their market share is falling in major markets and why the business finds itself increasingly focused on emerging markets where you don't get premium pricing," he said.

Cochlear, which dominates the global market for hearing implants, says sales since January had been weaker as the company waited for approval to sell its Nucleus 6 in the US and Europe.